Talking money can help you take control

New research from Nationwide's investment provider, Legal & General, shows that large numbers of us desperately avoid bringing up the 'M' word in conversation – no matter whom that conversation is with. Spending habits are one of the subjects couples most frequently avoid, debt is the least popular subject to discuss with our parents, and we'd rather talk to friends about politics and family scandals than about how much we earn, how much we owe and how much we're saving.

This reluctance to talk about money matters isn't just restricting topics of conversation; it's hurting people's finances and their plans in life. And it's causing a lot of stress in the process. In the Legal & General research, 41% of people say that money is one of the things that they worry about most. Yet a large number of those people do most of their worrying alone, since 46% say money is a personal matter that shouldn't be discussed.

It's hard to make a meaningful plan for your finances without being prepared to talk about them – but once you do, it's far easier to address the issues that worry you, and bring the things that you want in life within reach.

Here are 5 of the top money taboos that Brits tiptoe around in conversation, and how starting to talk about them can make a big difference to you and your family.

Debts

Whether it's a mortgage, credit card, loan or overdraft, most of us will owe money at some point in our lives. And yet a startling number go out of their way to avoid talking about it. Legal & General's study claims one in five people admit to lying to a partner about how much they owe.

All of this makes debt a big contributor to the strain that financial pressure can put on family life, something that 39% of people admit to in the Legal & General study. After all, the average unsecured household debt now stands at £6,389 (PDF). With standard interest rates for credit card debts of between 15% and 20%, it could take two years of paying £321 per month to clear £6,389, all for a debt that many people find it difficult to admit exists. Paying off debts should be a first step in taking more control of your finances, and the Money Advice Service is a good place to start.

Budgeting

It's easy to associate budgeting with being unable to afford things. Nobody wants to be the 'scrooge' in the relationship, asking questions like "how much have we spent on food this month?"

This is a pity because, far from being a sign of struggling to make ends meet, being able to set a budget and stick to it can be the key to taking control of your financial future. "In the long run, it's not just how much money you make that will determine your future prosperity," said the famous (and very wealthy) investor, Peter Lynch. "It's how much of that money you put to work by saving it and investing it."

Being able to free up just a hundred pounds or so of disposable income each month can make a huge difference to your financial choices: it can help you to pay off debts quickly, put together a rainy day fund to provide you with financial security, or give you the possibility of bigger returns in the future through investing. And finding extra money each month doesn't have to involve giving up the things that matter to you. In a recent Your Nationwide feature, we looked at simple lifestyle tweaks that could help to save more than £3,000 in just eight months.

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Please note that the value of investments can go down as well as up and you may not get back the money originally invested.

Illness and the unexpected

What would happen if the main breadwinner in your household suddenly had to stop work because of illness or an accident? In most cases, the answer is quite bleak. The average UK household only has enough money available to last for 29 days before they would be forced to rely on help from friends, relatives or the Government.

Yet despite this, planning for the unexpected is another financial subject that we'd rather not talk about. Psychologists such as Tali Sharot put this down to our inherent belief that "it won't happen to me". For many of us, thinking about bad things happening seems to bring the possibility closer to home. Yet preparing for some of life's worst-case scenarios can make a huge difference if they do come about.

Any household should look to build up a rainy day emergency fund in cash to help in the case of accidents, illness – or being made redundant. Nationwide advises setting aside three months of earnings in this way. Taking out critical illness or income protection cover can offer a manageable way of protecting your home and family on top of this, and is especially important if you don’t have rainy day savings available.

Death

Over a third of couples avoid talking about death – and a similar proportion of people won't discuss it with their parents according to the Legal & General research. It seems understandable, but refusing to discuss the financial implications can make things a lot more upsetting and stressful when the worst does happen.

It can seem a natural human instinct to avoid the subject of death – but actually, it isn't. Psychologists argue that our fear of discussing mortality is a relatively recent phenomenon that comes about through not encountering death very often. A hundred years ago, when living past 40 was quite an achievement, death was discussed much more openly.

The price of our dreams

Everyone loves to dream and have goals - to work less, drive a better car, buy a second home in some sunny clime. Yet working out how much those dreams might cost is a far less popular subject. It's easy to feel that dreams will fall apart under financial scrutiny. Perhaps that's why so few people like to talk about how much they're actually saving.

Financing life's goals can seem daunting if you have to rely on savings at the current low rates of interest. For some people, taking on some risk in the form of investments could play a role in bringing them within reach. They would need to address the other money taboos in this list first, including paying off debts, building up a rainy day fund, and budgeting successfully to give them genuinely disposable income. But once they've done so, they would be able to put together an investment plan aimed at achieving what's important to them.

Want to explore investments further?

If you regularly set aside money for your future, redirecting some of your savings into investments could make a noticeable difference to where you end up financially.

Discuss your options

Make an appointment with a Nationwide Financial Planning Manager to understand more about your investment options. We restrict our advice to a limited range of carefully selected products available through Legal & General. To benefit from this service you'll need a household income or savings of £50,000.

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